Analysis of Nixon v. Missouri:
Supreme Court Decision Will Embolden Industry Efforts to Seek State
Legislation to Ban or Severly Limit Municipal Provisioning of Telecommunications
April 6, 2004
EXECUTIVE SUMMARY
Emboldened by a recent Supreme Court decision, telephone and cable
advocates are preparing state level advocacy efforts to ban or severely
limit municipal provision of telecommunications services. Local
governments, local utilities and State Leagues must be vigilant
to meet this threat in 2004-2005.
BACKGROUND
Section 253(a) of the Telecommunications Act of 1996 bars state
and local laws that "prohibit or have the effective of prohibiting
the ability of any entity to provide any interstate or intrastate
telecommunications service."(emphasis added) On March 24, 2004,
by an 8-1 margin, the United States Supreme Court in Nixon v. Missouri
Municipal League, ruled Section 253(a) does not preempt state laws
that limit the power of local governments to provide telecommunications
services. The Court explained that for Congress to so disrupt the
comity afforded states, it must do so explicitly, and that such
an explicit preemption is not contained in Section 253. The opinion
is available at http://www.telecommunityalliance.org/images/02-1238nixonmissouri.pdf
THREAT
Because there was disagreement among the lower courts regarding
the scope of the protection afforded local government under Section
253(a), a number of states[1] have already
been persuaded by industry to enact laws banning, or imposing terms
and conditions for municipal entry that would be unacceptable to
any private sector provider. It is likely that industry advocates
will try and build on the legislation found in those states as the
basis for limiting rights in more states.
ARGUMENTS
One industry paper [2] that is likely to become
the reference manual for the industry efforts lists four major reasons
municipalities should not be permitted to enter the broadband business.
Local government must be ready to rebut these claim, which include:
- Broadband is high risk and taxpayers funds should not be so
exposed;
- Local government can not regulate and compete at the same time.
It is a conflict of interests;
- Municipal broadband enjoys too many unfair advantages over the
private sector providers, most of which surround government's
claimed ability to waive fees and use general funds as support;
- The collective result of the above claims will result in the
public being hurt as tax dollars are squandered and the environment
for private investment is chilled; and
- Municipal provision of broadband is fraught with antitrust and
First Amendment issues.
TeleCommUnity will continue to monitor this issue. For further
information and to obtain assistance, contact TeleCommUnity.
Notes:
1. States fitting into this category are : Arkansas (Ark. Code §
23-17-409); Georgia, Massachusetts (. M.G.L., Ch. 164, Sections
34, 35 and 36); Minnesota (Minn. Stat. Ann.§ 237.19.), Missouri,
Nebraska, Nevada (Nevada Statutes § 268.086.), Tennessee, Texas
(Texas Pub. Util. Code § 54.202) and Virginia.
2. Burt Braverman, Municipal Broadband Networks: The Wrong Path
to Intelligent Cities, March 26, 2004. Available at http://www.telecommunityalliance.org/images/braverman.pdf
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